The U.S. Small Business Administration has released a single-page form aimed at simplifying the application process for forgiveness of Paycheck Protection Program loans, together with revised and updated forms to comply with the most recent stimulus legislation.
Congress approved the COVID-19 relief plan last month that included $284 billion of financing to small businesses in need of loans. The funds were used to offset the economic impact of the coronavirus pandemic. The law required that the SBA release simplified forms within the first 24 hours after the bill’s passage into law. This was done to facilitate the application for forgiveness. Additionally, it included conditions that would encourage community banks to lend more specifically to minority-owned companies who were unable to obtain loans last year.
Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs wrote that the Small Business Administration fulfilled the requirement to issue the one-page form for PPP loan forgiveness within the first 24 hours from the date of the enactment of the Consolidated Appropriations Act, 20,21. The article was posted on the Current Federal Tax Developments blog of Kaplan Financial Education. “The agency also issued new forms.”
First Draw PPP Loan forgiveness terms
Student Loan Debt Forgiveness Pros And Cons – For eligible borrowers First Draw PPP loans can be suitable to forgive loans. This happens when the loan payment is made within an 8 to 24 week period.
- Employee and compensation levels are kept at a constant level.
- The loan proceeds are spent on payroll expenses and other expenses that are eligible and
- A minimum of 60% of the proceeds go to payroll costs
Second Draw PPP Loan Forgiveness The terms
Second Draw PPP loans to eligible borrowers are eligible for loan repayment if the loan is paid within an 8to 24 week period.
- The First Draw PPP loan requires that the employee and compensation levels be maintained in the exactly the same manner.
- The proceeds of the loan could be used to cover payroll costs or other expenses that are eligible.
- A minimum of 60% of profits are used for the cost of payroll
- How and when to apply for loan forgiveness?
Once all of the loan funds have been utilized the borrower is eligible for forgiveness. Borrowers can apply for forgiveness any time up until the date of maturity of the loan. Borrowers who do not request forgiveness within 10 month of the expiration date of the loan are eligible to receive loan payments from their PPP lender.